PROFIT programme driving financial inclusion for Nyandarua farmers

For many potato farmers in Nyandarua, massive losses from
challenges such as frost and undercutting by middle-men are just some of the
problems that drive them to near-desperation.

Sad stories are told about farmers whose property has been
auctioned off to pay for loans they could not service due to poor harvests
occasioned by inclement weather and exploitation by middle-men.

Unfortunately, such are common tales especially among
small-scale farmers. In a sector that
employs close to 7 out of every 10 people in Africa, the occupation can often
be a hit-or-miss proposition. Crops may
fail, or prices may fall, meaning disaster for those who may have taken loans
to prepare their crops.

According to the World Bank, less than 5% of total bank
lending in Africa goes to the agricultural sector. Some of the challenges associated with
lending to small farmers include; high costs of providing small loans such as
costs of loan appraisal, monitoring and follow up, lack of credit history
information and lack of farm records.

With support from a partnership between International Fund
For Agricultural Development (IFAD), the government of Kenya and Alliance for a
Green Revolution in Africa (AGRA), Programme for Rural Outreach of Financial
Innovations and Technologies Program (PROFIT) has helped one financial
institution to make significant steps towards changing the narrative,
de-risking the agricultural sector and bringing a range of financial services
to smallholder farmers in Nyandarua County.

Started 43 years, Tower SACCO (formerly known as Nyandarua
Teachers Savings and Credit Cooperative Society) has made great strides in
offering financial services not only to the teaching fraternity but have
widened the common bond to allow membership from different occupations and
business activities across the country.

“We have come a long way from the days when our main
business was just selling and recovering money, without really caring about the
needs or challenges of our clients,” says Tower SACCO Chief Executive Gabriel
Njihia.

He says that 2017 was the beginning of a turn-around in
their relationship with members.

“That year, we were introduced to a programme where our
staff from the credit and marketing departments were taken through a course
that exposed them to insights on how agriculture value chains work, the
different players in the value chain and their roles at different levels of
production,” he says.

“One other insight that we are grateful about was the advice
we were given about hiring an agronomist who would work with our members to
improve their farms. It seemed like a
strange move at the time, but today we see the benefits,” says Gabriel.

Tower SACCO has so far trained over 30 groups, reaching over
300 farmers with information such as good agronomic practices, book keeping and
budgeting. Farmers growing potatoes have
been linked with processors such as Sereni Fries and Tropical Heat, ensuring
better prices and cutting out middle-men.

Mwendi Kurima, a farmers cooperative society who are also
beneficiaries of the PROFIT program through capacity building of smallholder
farmers and linkage to market and financial services (Tower SACCO). Mwendi
Kurima started with 13 farmers and has seen sporadic growth to the current
registered membership of 350 farmers.

“Some of the problems we had included accessing loans,
certified seeds, farming implements and access to organized markets, but
working with Tower SACCO is now a preferred partner to our members, as our
members start paying back loans after delivery of their produce to the market,”
David Mureithi, Chairman Mwendi Kurima says.

“As part of the financial package we have also received an
insurance package against drought, frost and heavy rains, and we can get inputs
like seeds, fertilizer. We have an
agronomist from the SACCO working closely with us”, he adds.

Capacity building that includes training in agricultural
value chain financing, development of tailor-made products suitable to
agriculture such as loans with repayments aligned to farmers cash flow, prudent
risk management framework and strategies is slowly making SACCOs attractive to
big lenders such as the Agricultural Finance Corporation (AFC).

Things are looking up for groups associated with Tower
SACCO. The Nyandarua county government has signed an agreement with the SACCO
to help women, youth, and persons living with disability to access affordable
loans to help them execute county government tenders.

Local purchase/service orders will be used as collateral to
access up to 60 per cent financing from Tower.
The funding is tied to technical assistance on fiscal discipline and
management skills.